Tishman Speyer Properties and BlackRock Realty argued today before the Court of Appeals in Albany to overturn a lower court decision that could force them to pay hundreds of millions of dollars in rent rebates at Stuyvesant Town.
The Appellate Division of the State Supreme Court ruled unanimously in March that the Tishman Speyer/BlackRock partnership and the prior owner, Met Life, had wrongfully deregulated about 4,350 apartments and raised rents beyond certain set levels, while receiving tax breaks from the city.
The two concerns had acquired Stuyvesant Town and the adjacent Peter Cooper Village housing development in East Midtown along the East River between 14th and 23rd Streets for $5.4 billion from Metropolitan Life in 2006.
A front page article by Charles V. Bagli in today's edition of The New York Times said that "real estate analysts say that the partnership's money will run out as soon as December and that the owners are at 'high risk' of default on $4.4 billion in loans."
"Two real estate executives who have been briefed on the finances insist that the owners can hold out," it continued, "but only until February."
City officials, according to the article, "have been monitoring the looming crisis, worried that the financial problems could eventually lead to default, deferred maintenance and disinvestment at a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers."
About 6,875 of the 11,227 apartments at the complexes are rent regulated. The complexes include 110 mid-rise red-brick buildings.
The article said that the partnership has "nearly exhausted" $890 million it had set aside for renovations and interest payments at the complexes, adding that "rents are down 25 percent from their peak." The acquisition was based in part on the premise that rents would rise as regulated apartments were vacated.
According to The Times article, a recent report from Realpoint, a credit rating agency, estimates that the property has a value today of only $2.13 billion - less than half of what the partnership borrowed to buy it. The article also said that Tishman Speyer only has about $56 million in the deal and there is a $3 billion first mortgage and a $1.4 billion second mortgage.
The Appellate Division of the State Supreme Court ruled unanimously in March that the Tishman Speyer/BlackRock partnership and the prior owner, Met Life, had wrongfully deregulated about 4,350 apartments and raised rents beyond certain set levels, while receiving tax breaks from the city.
The two concerns had acquired Stuyvesant Town and the adjacent Peter Cooper Village housing development in East Midtown along the East River between 14th and 23rd Streets for $5.4 billion from Metropolitan Life in 2006.
A front page article by Charles V. Bagli in today's edition of The New York Times said that "real estate analysts say that the partnership's money will run out as soon as December and that the owners are at 'high risk' of default on $4.4 billion in loans."
"Two real estate executives who have been briefed on the finances insist that the owners can hold out," it continued, "but only until February."
City officials, according to the article, "have been monitoring the looming crisis, worried that the financial problems could eventually lead to default, deferred maintenance and disinvestment at a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers."
About 6,875 of the 11,227 apartments at the complexes are rent regulated. The complexes include 110 mid-rise red-brick buildings.
The article said that the partnership has "nearly exhausted" $890 million it had set aside for renovations and interest payments at the complexes, adding that "rents are down 25 percent from their peak." The acquisition was based in part on the premise that rents would rise as regulated apartments were vacated.
According to The Times article, a recent report from Realpoint, a credit rating agency, estimates that the property has a value today of only $2.13 billion - less than half of what the partnership borrowed to buy it. The article also said that Tishman Speyer only has about $56 million in the deal and there is a $3 billion first mortgage and a $1.4 billion second mortgage.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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